How is the AE function placed onto the 45 $\circ$ graph?
A)It starts at zero income and rises with a slope equal to the MPE.
B)It starts on the vertical axis at the level of autonomous expenditures and rises with a slope equal to the MPE.
C)It starts at zero income and falls with a slope equal to the MPE.
D)It starts on the vertical axis at the level of autonomous expenditures and falls with a slope equal to the MPE.

Question

Quizplus · Accepted Answer

The AE function starts on the vertical axis at the level of autonomous expenditures (represented by the vertical intercept) and rises with a slope equal to the MPE. AE is calculated as the sum of autonomous expenditures and induced expenditures (the product of MPE and income), so as income increases, the induced expenditures add to the autonomous expenditures, causing the AE function to rise.

How Is the AE Function Placed onto the 45 ∘\circ∘ Graph? A)It Starts at Zero Income and Rises with

How Is the AE Function Placed onto the 45^$\circ$ Graph?
A)It Starts at Zero Income and Rises with